Should You Convert to a Roth IRA Before Year-End?

Stock market today, the final 3rd quarter results, Micron earnings, and your 4th quarter financial plan. And yes, we're going to connect artificial intelligence to the McDonald's French fries like we've done in the past. Welcome to Thursday, October 1st. I'm Mike Milligan, and this is the One of a Kind Financial Show Daily. Yesterday, we kept the lessons from the 3rd quarter. Today, we have the closing numbers. And we start deciding what to do with what we learned. Remember our July story about the Idaho businessman who connected 2 very different kinds of chips? Keep that story in mind. It's coming back around. Let's get to it.

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First, the final trading day of September and the 3rd quarter. The Dow Jones Industrial Average closed at 50,906.05, down 443.87 points or 0.86%. The S&P 500 finished at 7,651.54. That was down 19.3 points or a quarter of a percent. The NASDAQ Composite gained 63 points or 0.24% to finish at 26,861.06. The Russell 2000 fell 11.06 points or 0.39%, closing at 2,796.86. Now let's zoom out to the entire 3rd quarter. From the June 30th close through September 30th, the S&P 500 gained 2%, while the Dow lost 2.7%, according to CNBC's rounded quarter-end figures. The NASDAQ gained 2.47%, while the Russell 2000, our leader at the end of August, Lost 7.52% in what was a very poor September return. That is why, how did the market do, needs a follow-up question. Which market? The S&P and NASDAQ finished higher for the quarter. The Dow and small companies did not. Those are price index changes, not the return on your account. So your holdings, cash flow, dividends, cost, and taxes can make your experience different. And that closes one important loose end from yesterday. We now have the completed scoreboard, not a quarter-to-date estimate with one trading day missing.

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The 10-year Treasury yield index closing reading was 5.92%. 5.29%, up 4 basis points on Wednesday. It began the quarter at 4.42%, making the full quarter index 0.87% higher. That is not a bond investment return. It's a change in yield. And rising yields push down the resale prices of existing fixed-rate bonds, In many bond mutual funds and indexes. For the household, that means 2 different conversations: the income available on new purchases and the risk of needing to sell existing holdings before maturity. See, neither conversation should stop at the yield looks attractive. It starts with when do you need the money. The VIX closed Wednesday at 16.34, up from Tuesday's 16.04. But slightly below where it started the quarter at 16.45. A nearly unchanged quarter-end volatility reading can sit alongside very different results across stock indexes. 2 indexes up, 2 indexes down. The VIX reflects expected near-term volatility in S&P 500 options. It does not measure every risk in your household or tell you which direction stocks will go next. CNBC reported that Wednesday's softer-than-expected inflation data did not prevent long-term yields from finishing higher. This is a useful reminder as we enter October. One encouraging report does not settle every question.

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Now to the last big earnings story of The end of the 3rd quarter. Micron reported its fiscal 4th quarter results Wednesday evening. That fiscal period ended September 3rd, so do not confuse it with a calendar 3rd quarter we just completed. Some companies have different fiscal years, which means their quarter ends at different times. Micron's 4th quarter results, revenue was $54.23 billion versus $55. $51.07 billion, which was expected as reported by CNBC. Adjusted earnings were $0.3342 per share compared to what the expected $31.61 expected. The company's GAAP earnings using standard accounting rules were $32.87 per share. That is a different measure from adjusted earnings. For its next fiscal quarter, Micron guided to revenue between $60 and $63 billion with a midpoint of $61.5 billion. That is higher by almost 20% than what they just accomplished. Those are management forecasts. They're not completed results, but here's why this matters beyond a quarterly earnings beat. AI processors need memory, including high-bandwidth memory, to handle demanding workloads. Uh, this is described as strong AI demand running into constrained memory space. Think of the processor as doing the calculations and the memory as keeping the needed information close at hand. A fast worker still needs access to the materials. On its earnings call, Micron said clean room space is a principal constraint. Management also explained that construction spending does not immediately become chip output and that production capacity will be equipped according to demand. That's a lot of talk saying that when there is that much demand, Prices can be marginally higher. It's a basic economic principle. So this connects directly to our 3rd quarter AI CapEx spending conversation. See, over the fiscal year 3rd quarter, we continued to remind you that there were 2 pieces we needed to monitor: the consumer and AI cap spending. See, spending the money, building the factory, producing the chips, and earning return are different stages. My question that's going into Q4 is not simply, is AI existing? It is, what has to happen for today's investment to produce tomorrow's earnings? And what if it takes longer than expected? Micron's own release warns that actual outcomes can differ from expectation because of risk involving demand, investments, products, and operating performance. See, the companies are starting to say similar things to what I have been questioning on the One of a Kind Financial Show Daily. Strong results, though, deserve attention. They do not make a stock appreciated at every price. Or for every person.

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Back on July 13th show of the One of a Kind Financial Show Daily, I introduced J.R. Siplett. Today's Micron report gives us a reason to revisit the connection without turning a great business story into a stock recommendation. Siplett built an Idaho food and agriculture business, and his company developed a commercial frozen French fry process Well before its McDonald's partnership. Then McDonald's came knocking. Then in 1967, when Ray Kroc and Sipplet made an agreement, Sipplet supplied fries to McDonald's restaurants in the United States. That partnership became an important chapter in both companies' history. Years later, Siplent helped another Idaho business, Micron. Micron's own historical filings identify Siplent as one of its initial investors and says he served on its board beginning in 1980. So yes, the connection is real. French fries for a growing restaurant chain, an investment in a company making computer memory with a different type of chip. Different products, connected through the same businessman. But here's what I do not want you to take from that story. A famous entrepreneur made a bold bet, so I should put my retirement on the next exciting company. An entrepreneur's capital, control, and time horizon and capacity for loss may be very different from yours. We remember the businesses that became household names. Not every early investor becomes that story. What I take from this is curiosity. Look past the familiar label. Ask what problem a business solves, what resources it needs, and what could go wrong. And there's our handshake connection. Cipriot's handshake with Kroc was a business agreement. The retirement handshake asks us to think about the rules attached to our retirement money, And the silent partner that is coming for their share. See, there's different stories here, but a useful planning question. Do you understand the terms of your partnerships? Or just like the promise, are you waiting for the partner to dictate the terms?

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Before we charge into October, let's carry forward 3 lessons for the quarter. First, the headline index is not your portfolio. Our breadth discussions were reason to look deeper, not a countdown to a guaranteed crash. Second, higher yields deserve a review of borrowing costs, cash needs, and bond risk. They are not by themselves a reason to announce that every Treasury investment is unsafe. And third, neither an AI earnings report nor a buyback headline replaces a financial plan. What matters is how much your future depends on one comp— how much your future should not depend on one company, one industry, or one assumption. Now let's make good on yesterday's promise. Finish 2026 with intention. Start by writing down the cash your household expects to need before year end. Include your expenses that are easy to forget when you're, uh, when you're only looking at investment returns. Then review what you own and what You want to own, own. Has your allocation drifted? Are different funds leaving you more exposed to the same companies than you intended? Concentration risk. Review before you react. Next, schedule your year-end tax conversation. Bring your income estimates, realized gains and losses, retirement distribution questions, and charitable intentions. Ask what needs a decision now rather than assuming everything can wait until tax filing season. And welcome everyone to Rothtober. Our theme will be Run the Numbers, Not Everybody Should Convert. Because in this month of October, we want to make sure that the IRS does not trick you and you look at your money as a treat for you to enjoy. The IRS says a Roth conversion generally brings, uh, previously untaxed amounts into taxable income. And conversions made after 2017 cannot be recharacterized back to traditional IRAs. That makes advanced analysis important. And then finally, revisit care and legacy. Who knows what the important documents are? Who would help if your health changed? And have the people named in your plan changed since you last looked? On the economic calendar, some things are coming up. The ISM Manufacturing Report, Today. Tomorrow brings the September employment report. We'll follow the evidence as it arrives.

We did—

we do not need to pretend we already know the answers. So we started July talking about 2 kinds of chips. We start October with a reminder that your financial future should not depend on putting all of your chips on one story. Keep the curiosity, add the discipline, put the next decision on paper. I turned 50 in the third quarter and the calendar feels a little, a little different this week. I still want to know what the market did, but I also want to know what I am doing with the time I have. So give this fourth quarter a financial goal and a life goal, one decision that needs attention and one moment you do not want to miss. If you need help connecting these goals, text the word ideas to the number 600-700. Share this episode with someone who needs the market numbers, but maybe hasn't written down the next steps on their own. The third quarter—it's in the books. Your next chapter does not have to be left to chance, and it should not be left unwritten. I'm Mike Milligan. Educate, coach, plan is my mission, and never miss a moment's my motto. Estoy aprendiendo. I'm still learning, and I'll see you tomorrow. This program is general education, not personalized investment tax or legal advice. Investing involves risk, including loss or the potential loss of principal. Securities mentioned are examples, not recommendations. Past performance and company forecasts do not guarantee future results. Indexes, uh, referenced are unmanaged and not directly invested into. And there's some ETFs, mutual funds, and indexes that mimic those indexes. Reported price changes exclude dividends, fees, and taxes. Bond prices can decline as interest rates rise. Diversification does not guarantee a profit or prevent a loss. Tax strategies depend on individual circumstances and applicable law. Consult qualified professionals before acting. Neither this program nor any strategy discussed is approved or endorsed by the Securities and Exchange Commission. I am a licensed— I am an investment advisory representative with Advisory Alpha LLC. One Oak Financial, Ideas by Mike, doing business as One Oak Financial, and Mike Milligan LLC, doing business as The One Oak Collective, are unaffiliated entities of Advisory Alpha LLC.

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